If you have received a car insurance quote, you must have seen a line item called own damage premium or OD premium. Many car owners confuse it with the total insurance premium or overlook it entirely. This article explains what OD premium means, what it covers, how it is calculated, and why it matters for your car.
What Is Own Damage (OD) Premium?
The own damage premium , also written as OD premium, is the amount you pay to insure your own car against physical damage or loss. It is one of the two main components of a car insurance policy. The other is the third-party liability premium.
In simple terms, the OD premium covers your vehicle. It does not cover damage or injury caused to someone else on the road. That responsibility falls under third-party insurance.
Many car owners ask: what does basic OD premium mean? The basic own damage premium is the base rate applied to your car's Insured Declared Value (IDV) before any add-ons, NCB discounts, or voluntary deductibles are factored in.
What Is Net Own Damage Premium and Total Own Damage Premium?
These terms appear on your policy document and are often a source of confusion:
Basic OD Premium: The starting amount before any discounts or add-on costs are applied.
Net Own Damage Premium: The basic OD premium after NCB discounts and voluntary deductible reductions, but before add-on costs.
Total Own Damage Premium: The final amount you pay. This includes the basic premium plus add-on costs, minus NCB discounts and deductible reductions.
What Does Own Damage Insurance Cover?
A standard own damage car insurance policy covers the following situations:
Accidental damage: Physical damage to your car from a road accident, including damage to the body, engine, or other components.
Theft: If your car is stolen and not recovered, the insurer pays the IDV of the vehicle.
Fire and explosion: Damage caused by fire, self-ignition, lightning, or an explosion is covered.
Natural calamities: Floods, earthquakes, cyclones, hailstorms, landslides, and similar events are covered.
Riots and strikes: Damage to your car during civil unrest or a strike is covered under own damage insurance.
Transit damage: If your car is damaged while being transported by road, rail, or water, the cover applies.
You can extend your base own damage cover with add-ons such as zero depreciation, engine protection , consumables cover , tyre protection , and roadside assistance .
What Is Not Covered Under Own Damage Insurance?
Knowing the exclusions is just as important as knowing what is covered. Own damage insurance does not cover:
Damage caused while driving under the influence of alcohol or drugs
Damage from regular wear and tear
Mechanical or electrical breakdowns not linked to an accident
Driving without a valid licence
Consequential losses (damage that follows indirectly from the original damage)
Third-party injuries or property damage
Damage caused by nuclear war or radioactive contamination
Own Damage Premium vs Third-Party Premium
Aspect | Own Damage Premium | Third-Party Premium |
|---|---|---|
Coverage | Damage to your own car | Legal liability towards third parties |
Mandatory by law | No | Yes |
Premium amount | Based on IDV, age, location, NCB | Fixed by IRDAI based on engine capacity |
Customisation | Can be extended with add-ons | Not customisable |
Claim settled to | Policyholder or network garage | Affected third party |
Covers your car | Yes | No |
How Is Own Damage Premium Calculated?
The own damage premium follows a straightforward formula:
Own Damage Premium = (IDV x Premium Rate) + Add-on Costs - NCB Discount - Voluntary Deductible Discount
Sample Calculation
Here is a worked example to make things easier:
Car: Maruti Swift
Ex-showroom price: Rs. 7,00,000
IDV (after depreciation): Rs. 6,50,000
OD premium rate: 2%
Basic OD premium: Rs. 6,50,000 x 2% = Rs. 13,000
Zero depreciation add-on: + Rs. 2,000
NCB discount (20%): - Rs. 2,600
Total own damage premium: Rs. 12,400
The rate used above is indicative. Actual rates depend on the vehicle category and the insurer.
Factors That Affect the Own Damage Premium
Insured Declared Value (IDV) : IDV is the current market value of your car. A higher IDV means a higher premium but also better coverage in a total loss or theft event.
Age of the car: Older cars have a lower IDV due to depreciation, which usually brings the premium down.
Make and model: High-end and luxury cars cost more to repair and carry higher premiums.
Engine capacity: A larger engine typically means a higher premium.
Geographical zone: Cars in cities with higher accident or theft rates attract higher premiums. Zone A cities such as Mumbai, Delhi, Bengaluru, and Chennai usually have higher rates than Zone B cities.
No Claim Bonus (NCB): NCB is a discount on your own damage premium for every claim-free year. It starts at 20% after the first claim-free year and can go up to 50% after five consecutive claim-free years.
Add-ons: Optional covers like zero depreciation, engine protection, or roadside assistance add to the premium.
Voluntary deductible: Choosing to pay a fixed share of any claim from your own pocket lowers your OD premium. Make sure the chosen amount is within your budget.
Vehicle modifications: Accessories like a CNG kit or alloy wheels can change the IDV and affect the premium.
Is Own Damage Insurance Mandatory?
No. Under the Motor Vehicles Act, only third-party insurance is mandatory for all vehicles in India. Own damage cover is optional.
That said, skipping own damage cover on a new or high-value car is a financial risk. A single accident, flood, or theft incident could mean a large repair or replacement cost that you pay entirely from your pocket. For most car owners, pairing third-party insurance with an own damage policy gives complete financial protection.
Since September 2019, IRDAI also allows car owners to buy standalone own damage policies. This means if you already have third-party insurance, you can add an OD policy separately without buying a full comprehensive plan.
How to Save on Your Own Damage Premium
Build your NCB: Avoiding small claims lets your No Claim Bonus accumulate. A 50% NCB after five claim-free years can bring down your OD premium significantly.
Choose a voluntary deductible wisely: A higher deductible lowers your premium. Pick an amount you can comfortably pay if you need to make a claim.
Skip unnecessary add-ons: Add-ons raise your premium. Choose only those that match your driving habits and location.
Renew on time: Letting your policy lapse resets your NCB to zero, which can increase your premium at renewal.
Compare before buying: Use a premium calculator to check rates and find the right plan for your budget.
Get Own Damage Car Insurance from Zurich Kotak
Zurich Kotak General Insurance offers own damage cover as a standalone policy or as part of a comprehensive car insurance plan . You can add a range of covers to build a plan that fits your car and your needs.
Frequently Asked Questions
1. What does OD premium mean in car insurance?
OD premium, or own damage premium, is the amount you pay to cover your own vehicle against damage from accidents, theft, fire, and natural calamities. It is separate from the third-party liability premium.
2. What is basic OD premium?
Basic OD premium is the base own damage premium calculated on your car's IDV before any NCB discounts, voluntary deductible reductions, or add-on costs are applied.
3. What is the difference between net own damage premium and total own damage premium?
Net own damage premium is the basic premium after NCB discounts and deductible reductions. Total own damage premium is the final figure you pay after adding the cost of chosen add-ons to the net premium.
4. Is own damage insurance mandatory in India?
No. Own damage insurance is not mandatory. However, third-party insurance is legally required for all vehicles in India. Own damage cover is strongly recommended for new or high-value cars.
5. How can I reduce my own damage premium?
You can reduce your OD premium by building your No Claim Bonus, opting for a voluntary deductible, avoiding unnecessary add-ons, and renewing your policy on time each year.
6. Does own damage insurance cover theft?
Yes. If your car is stolen and cannot be recovered, the insurer pays the Insured Declared Value of the car.
7. Can I buy own damage insurance without third-party insurance?
You can buy a standalone own damage policy, but you must already have a valid third-party policy in place. IRDAI has permitted standalone OD policies since September 2019.
Explore more on car insurance
Easy access to more, check out these quick links
